Fund managers should be subject to more rigorous standards to ensure their disclosures about environmental, social and governance (ESG) investing are accurate, according to Stoic Venture Capital.
Dr Geoff Waring, Stoic Venture Capital partner, said Australia should take the lead of the United States, European Union and United Kingdom by ramping up its scrutiny of ESG disclosure and compliance.
“Many investors are concerned about the hazy reporting of fund managers when it comes to their ESG investments,” Waring said.
“There is a lack of consistency and regulation in how funds report ESG investments and how ESG principles are integrated into their investment decisions and strategy and the impact this has on their returns.”
This was important given the growth of responsible investing which now accounted for 37% of $3.135 billion in assets under management, according to the Australian Bureau of Statistics (ABS).
“Stronger, more consistent guidelines and more information sharing would reduce the risk of misleading marketing claims about ESG investing,” Waring said.
“It would also push investor ESG preferences more effectively through fund managers down to the individual investee companies where many key decisions are being made.”